Saturday, September 24, 2011

Five myths about millionaires

This past week, President Obama tried to sell his new “millionaires’ tax” to the Rust Belt. “What’s great about this country is our belief that anyone can make it,” he said in Cincinnati on Thursday, praising “the idea that any one of us can open a business or have an idea that could make us millionaires.” But who are the millionaires Obama is talking about? And will a tax on them help the economy? Let’s examine a few presumptions about the man with the monocle on the Monopoly board.

1. Millionaires are rich.

Being rich has gotten more expensive. A $1 million fortune was unusual in the early 19th century. The word “millionaire” wasn’t even coined until 1827by novelist (and future British prime minister) Benjamin Disraeli. In 1845, Moses Y. Beach, editor of the New York Sun, published a small pamphlet called “Wealth and Biography of the Wealthy Citizens of New York City.” The price of admission to Beach’s list, which was wildly popular, was a mere $100,000.

By the time the first Forbes 400 list of the richest people in America was published in 1982, the smallest fortune featured was $75 million. There has been so much wealth creation in the past 30 years — much of it thanks to the microprocessor behind modern-day fortunes such as Dell, Microsoft and Bloomberg — that only billionaires are on the list. Today, $1 million in the bank generates only about $50,000 per year in interest. That isn’t chump change, but it’s roughly equal to the 2010 median household income.

2. Millionaires think they’re rich.

“Rich,” like “poor,” is a relative term. A family living on the American median income of $50,000 a year might think that one living on $500,000 is rich. But that second family, which probably knows families far better off than they are, thinks that you need $5 million a year to be truly rich, and so on.

On Thursday, 44 percent of people voting in an online survey as part of the GOP debate coverage said that a $1 million annual income made a person “rich.” In a 2008 survey of affluent Chicago households, only 22 percent thought a nest egg of $1 million was rich. In March, four out of 10 millionaires surveyed by Fidelity Investments said they do not feel rich. That same month, a majority of investment advisers surveyed in a Scottrade poll said that $1 million isn’t enough for retirement.

Though the average American family is rich beyond the wildest dreams of the average family in Bangladesh, where per capita income recently rose above $700, it’s not much compared with those who summer on beachfront properties in the Hamptons. When John D. Rockefeller learned in 1913 that the late J.P. Morgan had left an estate of $60 million, including a fabulous art collection, he reportedly said: “And to think — he wasn’t even rich.”

3. Millionaires pay proportionately less income tax than poorer people.

In a speech on Monday, Obama said raising taxes on millionaires isn’t class warfare, but “math.” His math may be off: According to the IRS, those with adjusted gross incomes of more than $1 million paid an average of 23.3 percent in federal income taxes in 2008; those earning between $100,000 and $200,000 paid 12.7 percent; and those earning between $50,000 and $100,000 paid 8.9 percent. Half of American families don’t make enough money to pay income taxes at all.

When the federal government turns to the saints to learn how to govern, I'll gladly support the idea of basing fair taxation on what they have to say.

But so long as a secular government is basing taxation on arbitrary distinctions of "richness" designed to increase their own misspent revenues, I'm going to suggest that turning to Chrysostom for a political solution to our debt problems is backwards.

But woe to you who are rich, For you have your consolation. Woe to you who are full, For you shall hunger. Woe to you who laugh now, For you shall mourn and weep.

Assuredly I say to you that it is hard for a rich man to enter the kingdom of heaven. And again I say to you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.

Son, remember that in your lifetime you received your good things, and likewise Lazarus evil things; but now he is comforted and you are tormented.

Anon - it may be more accurate to say a plurality that presents insoluble public choice problems. But given the majority of Americans receive more in government services and transfer payments than they pay in taxes, I'm afraid you're correct.

Hoarding one's wealth or redistributing someone else's? I'd say it is the mind of theChurch that the latter is more corrupting. You?

First, there's the fallacy that wealth is "one's own".

This is based on the peculiar notion that one has "created" one's wealth completely, ( I mean completely from the creation of matter, say gold, to the creation of a shovel and finding a location where gold is, to digging it up by oneself, to refining it, etc;etc;- get the drift?) and that one therefore owns it.

It's really just a subset of the notion that one's ego is one's self, one's personality...all by its lonesome.

Never mind the ancestors who made the present world, nor those around you who created, worked, struggled to make the conditions for you to have an education, obtain skills, use services, roads etc; ( get the drift again?).

"But given the majority of Americans receive more in government services and transfer payments than they pay in taxes, I'm afraid you're correct."

Same response.

It's amazing how selfishness, Randian-style, has infiltrated so deeply that it's considered to be normative.

Anon, In a fallen world, one can find many topics on which to grandstand and convey one's other-worldliness and erudition, including issues such as wealth and ownership. Us mortals on the ground, however, are left to deal with things as they are in our time and space, which means clear thinking in understanding a moral distinction between hoarding wealth and redistributing someone else's.

I'm comfortable in amassing massive wealth within the parameters established by contemporary Church practice. As long as I've a competent priest, I don't need to interpret random quotations from the Bible or the Fathers.

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